Economics Homework Ten Answers - Student Fifteen

IsaacZ

1. Externalities are the costs or benefits that happen to people who are outside the transaction.

Excellent.

2. marginal revenue must be 0 when total revenue is maximized because when total revenue is maximized there are no more units being made and therefor no more revenue is coming in for extra units.

Not quite. More units may be made but no one will buy them. Revenue (total or marginal) is on the sales side, not the manufacturing side. (Minus 1).

3. Question number 18 was the favorite one I missed because I like working with the graphs.

Good.

4. A positive externality example is playing christian music at a party so others who maybe haven't heard it may start to like it. A negative externality may be playing profane music at my party for my friends who like that music but there may be other people there who are not used to that type of music and may be offended by it

Excellent.

5. A private firm may not make a public good because they will make less money on it than it took to make it.

Right, but why? Because it is not possible to exclude non-buyers from use of a public good. (Minus 1)

6. A and B are complements while C and D are substitutes.

You have this backwards. (Minus 1)

57/60. Have a happy and blessed Thanksgiving.--Andy Schlafly 23:39, 25 November 2009 (EST)